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Friday, 6 June 2014

The motivations for spending and saving in Myanmar (and how tech is changing that)

As Myanmar opens up to the outside world and will soon get 3G cellular networks, how is the use of money and savings changing? A new report from a group that spent months studying what’s happening.

Myanmar is a country with very low formal banking penetration, but changes are afoot. It will soon have its first country-wide 3G network. Other developments include significant inward investment, the growth of a more stable, flexible financial policy, and an upcoming stock exchange, which should further stimulate domestic financial activity after it opens in 2015.In March of this year, a team from Myanmar-based Proximity Designs, frog and my strategy consultancy Studio D Radiodurans mapped Myanmar’s changing financial landscape. I’ve been working in the financial inclusion space for a decade, helping organizations understand the unique needs of resource-constrained consumers and designing products to meet those needs. I founded Studio D Radiodurans to help companies and organizations that are specifically looking to connect with mass market consumers in emerging markets, such as China, India, Indonesia and Brazil.

Most of you reading this are sophisticated banking customers. You expect instant access, online apps, notifications and analytics. Imagine not having access to any of that. Imagine having to carry all your wealth on your person, or hide it in your home.

When people talk about “banking,” they often lose sight of its core value proposition: take money out of circulation and keep it safe for access at a later date, offer access to credit, and provide a way to pay for things. After those three features, the benefits of banking are largely incremental. But life without these three things is very tricky. Rudimentary banking services (so-called financial inclusion) can help pull people out of poverty.

During our research in Myanmar, we mapped behaviors around and attitudes to savings, investments, loans and transactions. We also explored the duality of development, how the poor balance their culture and beliefs with the advancement and globalization of Myanmar, and how it has impacted their current lives and their outlook for the future.

It’s a journey that takes in betel sellers, monks, motorbikes, goats, a lot of gold, and even the afterlife. The report identifies thirteen findings and twenty one insights, as well as a number of opportunities for future products and services. It aims to provide a foundational reference for organizations wishing to develop products and services for financially constrained consumers in Myanmar.

Some of the findings map to what is known in other markets, albeit with characteristics that are unique to the country. For example, motivations for not defaulting on a loan vary by culture, person, context. In Myanmar, if devout Buddhist borrowers default on a loan, they place a heavy burden on themselves and their family — not just in this life, but also in the next. We also learned about the significance of the novitiation ceremony in the life of a devout Buddhist Burmese, an event that results in them spending as much as US$1,700 at once, even though they earn less than US$10 a day.